Belarusian Economic Research and Outreach Center

Is Market Timing Good for Shareholders?

We challenge the view that equity market timing always bene ts shareholders. By distinguishing the e ect of a rm's equity decisions from the e ect of mispricing itself, we
show that market timing can decrease shareholder value. Additionally, the timing of equity sales has a more negative e ect on existing shareholders than the timing of share repurchases. Our theory can be used to infer rms' maximization objectives from their observed market timing strategies. We argue that the popularity of stock buybacks and the low frequency of seasoned equity o erings are consistent with managers maximizing current shareholder value.